Health Insurers Set to Expand Offerings Under the ACA

Oscar, Cigna, Centene plan larger footprints

The fall in individual-market enrollment over the past few years is largely tied to the cost of insurance, according to insurers and analysts. A consultation about Affordable Care Act coverage in Dallas.
Photo:
LM Otero/Associated Press

The insurers’ moves reflect the improved finances of the business after sharp rate increases in previous years helped revenue catch up to claims costs. Premium increases for 2020 so far appear likely to be moderate in many markets, after rates were relatively flat or even down this year, analysts and insurers said.

“The market is now clearly stabilizing,” said
Mario Schlosser,
chief executive of Oscar. Oscar has proposed premium decreases in three states for next year.

In some cases, insurers are going into markets where there have been few options. For instance, Bright Health is entering Nebraska, which currently has just one ACA insurer. “We saw places where people were being underserved, there weren’t many choices,” said
Bob Sheehy,
the company’s chief executive.

Enrollment in plans sold through the ACA’s marketplaces, or exchanges, totaled around 10.6 million in the first quarter, roughly the same as the year-earlier figure, according to the Kaiser Family Foundation. But the overall number of people with individual insurance has dropped—to 13.7 million in the first quarter of this year, according to the Kaiser analysis, down from 14.4 million a year earlier and 18.8 million in 2015’s first quarter.

“It’s a good news/bad news situation,” with the ACA marketplaces steadying and drawing increased competition among insurers, said Geoff Bartsh, a vice president at nonprofit insurer Medica, which sells ACA plans in several states. “The broader individual market continues to have a lot of problems, and that’s shown by the number of people who are leaving.”

This year, the ACA’s financial penalty for people without health coverage went away, a fact that was likely a factor in the individual-plan enrollment decrease from 2018, said Cynthia Cox, a vice president at the Kaiser foundation. She said the decline also may reflect people who gained employer coverage.

But the sharper fall in individual-market enrollment since 2015 is largely tied to the cost of insurance, according to insurers and analysts.

The attrition has occurred largely in plans sold outside the ACA’s marketplaces. These plans draw people who don’t qualify for federal subsidies that help defray the costs of coverage. Those consumers have borne the full brunt of rate increases, which hit heavily in years before 2019.

“Affordability is what’s driving that,” said Paul Rooney, a vice president at eHealth Inc.

Teri Goodrich, a 61-year-old engineer in Raleigh, N.C., said she was forced to drop her ACA coverage in 2017, when the premiums became unaffordable and she made too much to get a federal subsidy. Ms. Goodrich, whose income fluctuates as she takes on consulting work, got a subsidy the following year that made ACA insurance affordable, and has stayed covered even without a subsidy this year.

But, she said, her current consulting contract will end later this fall, and she may drop her ACA coverage again then. Without the federal tax credit, “the insurance premiums are superhigh,” she said.

The lack of overall growth in the ACA market is likely one reason large national insurers that pulled out in past years are remaining on the sidelines for 2020, said Deep Banerjee, an analyst with S&P Global Ratings. Also, they are likely able to get stronger results from other lines of business, he said.

But companies that are currently in the ACA marketplaces said they want to expand, despite lingering risks like a court challenge to the law filed by a group of Republican-led states. Many ACA plans keep costs down with smaller selections of health-care providers, with some insurers, including Bright and Oscar, often building plans around a single major hospital system. Both Bright and Oscar said they are seeing increased interest from health-care providers in offering such plans.